Competition law update

In brief

In touch: Competition law update is a regular publication by the Allens Competition group to keep you informed of the latest news and developments in this area. For more information or for legal advice, please contact one of the Partners listed below. We look forward to hearing from you.

Harper Review news

You will recall that the Harper Review Panel released its draft report on 22 September 2014. For more detail, read the Allens Client Update: Competition Policy 'root and branch' review draft report released and listen to the Allens Video Update on the major proposals and potential implications for business.

On 26 November, the ACCC provided its submission to the Review Panel in response to the draft report. The ACCC states that it is largely supportive of the recommendations in the report in relation to competition law and policy, but expresses 'significant differences' in relation to the report's recommendations on competition institutions, in particular with the proposals to:

• separate infrastructure regulation from competition and consumer enforcement;
• introduce a revised ACCC governance model; and
• remove advocacy and education from the ACCC's functions.

Read the ACCC's submission and the ACCC media release

ACCC Chairman Rod Sims has recently commented publicly on aspects of the draft report. Addressing an economics conference in Sydney, Mr Sims backed the economic reforms proposed by the Harper Review Panel. Read the speech and the ACCC media release

Addressing the Australian Farm Institute Conference in Melbourne in the context of the Harper Review, Mr Sims identified three areas of improvement relevant to farmers around the collective bargaining and notifications process that were not considered in any detail in the draft report, and advised that the ACCC will be pursuing these with the Review Panel. Mr Sims also outlined areas where Australian agriculture can benefit from better competition policy and measures that can make markets work contained in the draft report, including privatisation, road transport, shipping and water. He also discussed misuse of market power, unconscionable conduct, use of industry codes of conduct, credence claims and access to infrastructure. Read the speech and the ACCC media release

ACCC News

Mergers & acquisitions: ACCC clears Elgas' acquisition of Kleenheat east-coast LPG business – 18 Dec 2014

The ACCC will not oppose Elgas acquiring Kleenheat’s east-coast LPG business after accepting court-enforceable undertakings. Kleenheat is owned by Wesfarmers Limited. Elgas has undertaken to divest parts of Kleenheat’s business in New South Wales, Victoria, and the ACT, to Renegade Gas and Origin. Kleenheat has undertaken to carry out a number of supporting actions to enable the divestitures to occur. Read the ACCC media release

Mergers & acquisitions: ACCC clears CSR and Boral's proposed clay brick joint venture – 18 Dec 2014

The ACCC will not oppose the proposed clay brick joint venture between CSR Limited and Boral Limited. CSR and Boral are both suppliers of a range of products including plasterboard, insulation, fibre cement, and roof tiles to the building and construction industry in Australia. CSR and Boral’s proposed joint venture only includes the manufacture, marketing, and supply of clay bricks in eastern Australia. Critical to the decision was the ACCC's assessment that Boral would be unlikely to remain in clay brick manufacturing in eastern Australia if the joint venture does not proceed. Read the ACCC media release

False or misleading discount representations: Discounts under energy plans – 16 Dec 2014

The Federal Court has found that AGL South Australia Pty Ltd made false or misleading representations and engaged in misleading or deceptive conduct concerning the level of discount residential consumers would receive under energy plans. The court found that consumers who commenced an energy plan between January and mid-July 2012 would have understood they would be charged the rates that generally applied to residential consumers like themselves as a result of making a telephone call to AGL SA and subsequently receiving a welcome pack. Although they initially received the discount, in mid-2012 AGL SA increased the rates and sent a letter to these consumers advising them of their new rates, which stated they would continue to receive their discount. This was not the case because, following the rate increase, their rates were higher than those AGL SA applied to consumers who later commenced an energy plan under its standard retail contract. A hearing will be held in relation to the relief sought by the ACCC on a date to be set. Read the ACCC media release

False or misleading price representations: Telstra pays $102,000 infringement notice penalty – 16 Dec 2014

Telstra Corporation Limited has paid a penalty of $102,000 following the issue of an infringement notice by the ACCC in relation to an advertisement for Telstra’s iPhone 6 and phone plan bundle. The advertisement prominently displayed the plan cost of $70 per month, when in fact consumers were required to pay an additional $11 per month for the iPhone 6. The additional payment and the total monthly cost of $81 were only displayed in fine print. The ACCC issued the infringement notice as it had reasonable grounds to believe that Telstra had made a false or misleading representation about the price of goods or services in contravention of section 29(1)(i) of the Australian Consumer Law. Read the ACCC media release

Product safety: Mountain View Farm recalls Organic Bath Milk – 12 Dec 2014

The ACCC is alerting consumers that Mountain View Farm Organic Bath Milk, which contains raw, or unpasteurised, milk and is sold in one and two litre varieties, has been recalled. Read the ACCC media release

Access to ports: ACCC seeks views on regulation at Victorian wheat port terminals – 12 Dec 2014

The ACCC has released an issues paper seeking views on whether to reduce regulation at Victorian wheat port terminals under the new mandatory Code on bulk wheat terminal access. The Code commenced on 30 September 2014, replacing the previous access undertakings regime administered by the ACCC, and regulates bulk wheat port terminal operators to ensure that exporters have fair and transparent access to terminal facilities.

The ACCC is assessing exemption applications for port facilities located in Victoria where the Code currently applies to established facilities controlled by different operators. The ports under assessment are GrainCorp’s bulk wheat port terminals at Geelong and Portland, and the Emerald bulk wheat terminal at the Port of Melbourne. GrainCorp and Emerald have lodged exemption applications for their respective ports, submitting that their Victorian terminals compete against each other and that this limits their ability to exercise market power. They also argue that the ports have excess export capacity and that their ability to exercise market power is limited by the domestic market, container exports, and prospective port developments. The issues paper outlines the exemption applications and seeks public submissions by 30 January 2015. Read the Issues Paper and the ACCC media release

False or misleading egg representations: ACCC takes action for free range claims – 12 Dec 2014

The ACCC has instituted proceedings in the Federal Court against R.L Adams Pty Ltd, which trades as Darling Downs Fresh Eggs, alleging that it made false or misleading representations that its eggs were free range, in contravention of the ACL. Darling Downs Fresh Eggs supplies eggs from farms located in Queensland approximately 40km south west of Toowoomba. The ACCC is seeking pecuniary penalties, a declaration, an injunction, an order for a compliance program to be established, a publication order and costs. The matter is set down for a directions hearing in Brisbane on 5 February 2015. Read the ACCC media release

Resale price maintenance: Bicycle parts and accessories suppliers provide undertakings – 11 Dec 2014

Two importers and wholesale distributors of bicycle parts and accessories to retailers across Australia have provided court-enforceable undertakings to the ACCC admitting that they had engaged in conduct that amounted to, or was likely to amount to, resale price maintenance. Read the ACCC media release

Anti-competitive conduct: ACCC institutes proceedings against healthcare organisation – 10 Dec 2014

The ACCC has instituted proceedings against Little Company of Mary Health Care Limited and its subsidiary Calvary Health Care Riverina Limited (together, Calvary) for imposing by-laws regulating the use of Calvary medical facilities by medical practitioners, which the ACCC alleges had the purpose of substantially lessening competition.

The by-laws include provisions allowing Calvary to refuse to grant, or to revoke, the right of a medical practitioner to use its facilities if the medical practitioner had become involved in the operation of a business in competition with Calvary. The ACCC is seeking pecuniary penalties, declarations and costs. The matter is listed for a directions hearing in Sydney on 4 February 2015. Read the ACCC media release

False or misleading representations: ACCC takes action against Ecoeggs supplier – 9 Dec 14

The ACCC has instituted proceedings against Derodi Pty Ltd and Holland Farms Pty Ltd alleging that their use of ‘free range’ egg branding was false and misleading. The representations were allegedly made on egg cartons, websites, a Facebook page and through a Twitter account. The ACCC is seeking declarations, injunctions, penalties, orders to implement compliance programs, corrective notices and costs. The proceedings are set down for a directions hearing in Sydney on 4 February 2015 before Justice Edmonds. Read the ACCC media release

Conditional authorisation to set minimum retail prices: ACCC gives authorisation to Tooltechnic – 5 Dec 2014

The ACCC has granted conditional authorisation to Tooltechnic to set minimum retail prices on Festool power tools until 31 December 2018. This is the first application for authorisation to set minimum retail prices under the Competition and Consumer Act 2010 (Cth). Given the highly differentiated nature of Festool products, the ACCC considers that resale price maintenance will limit free riding by encouraging Festool retailers to offer better services to attract customers. This will allow customers to make more informed decisions in purchasing quality power tools and to continue to have the choice of a premium quality power tool accompanied by a high level of post-sales services. Read the ACCC media release

Interim authorisation: ACCC grants interim approval to Medicines Australia code – 4 Dec 2014

The ACCC has granted interim authorisation to Medicines Australia to extend the existing authorisation for edition 17 of its Code of Conduct which is due to expire on 11 January 2015. The interim authorisation will remain in place until it is revoked or at the date the ACCC’s final determination in relation to the application for authorisation of edition 18 comes into effect. The ACCC anticipates that this will be in the first quarter of 2015. Read the ACCC media release

Cartel conduct: ACCC takes action against electrical cable suppliers – 4 Dec 2014

The ACCC has issued proceedings against five companies, six individuals and an industry association for alleged cartel and exclusionary conduct in the supply and acquisition of electrical cable. The ACCC alleges that certain manufacturers and wholesalers entered into, and gave effect to, an arrangement to prevent or restrict the supply of electric cables to contractors and customers, and to fix or maintain the price of cutting services. The alleged conduct mainly occurred at industry association meetings (it is also alleged the industry association was involved in these contraventions). The ACCC also alleges that two of the companies engaged in bid rigging in relation to the supply of electrical cable for an upgrade of an oil refinery in NSW. The ACCC is seeking penalties, declarations, costs and orders for compliance programs. The matter is listed for a directions hearing on 6 February 2015. Read the ACCC media release

False or misleading representations: ACCC takes action against online electronics store – 3 Dec 2014

The ACCC has commenced proceedings against an operator of an online electronics store for alleged false or misleading representations about consumer refunds rights and the extent of the store's liability for faulty goods. The matter is listed for hearing on 16 December 2014. Read the ACCC media release

Petrol pricing: ACCC reports on pricing for July 2013 - June 2014 – 3 Dec 2014

The ACCC has released its seventh annual report into the prices, costs and profits of unleaded petrol in Australia. Key findings include that:

• in 2013-14, the annual average retail regular unleaded petrol price in the five largest cities in Australia (Sydney, Melbourne, Brisbane Adelaide and Perth) was 150.6 cpl - a 9.3 cpl increase from 2012-13.
• the international price of refined petrol made up 54 per cent of the average price consumers were paying at the pump, while taxes made up 34 per cent.
• as a result of relatively low rates of fuel taxation, Australia’s petrol prices are among the lowest in the developed world. In the June quarter 2014, Australia had the fourth lowest retail petrol prices in the OECD.
• net profits for all products and services in the downstream petroleum industry were around $1.16 billion, compared with net profits in real terms of $796 million in 2012-13.
• the retail sector reported net profits of $495 million across all products and services in 2013-14, a decrease of 10 per cent in real terms from 2012-13.
• sales of ethanol blended petrol in Australia in 2013-14 decreased by around 8 per cent from 2012-13.

The ACCC is re-launching the petrol price cycle page on its website, which will provide the following information on petrol price cycles for each of the five largest cities:

• a chart with daily average prices over the last 45 days;
• the duration and shape of the past five price cycles; and
• new buying tips to help consumers understand the position of the current price cycle.

Read the report and the ACCC media release

Carbon tax repeal: ACCC focuses on electricity on-sellers – 2 Dec 2014

The ACCC has shifted its focus from electricity retailers and is now contacting electricity on-sellers to make sure they are aware of their obligations to pass on all carbon tax repeal cost savings to consumers. Electricity on-sellers buy electricity from retailers and on-sell it to customers on a site they own or operate, and include shopping centres and residential apartment blocks. Further guidance is available on the ACCC’s website. Read the ACCC media release

False or misleading representations: ACCC issues infringement notice for honey product – 1 Dec 2014

Bera Foods has paid a $10,200 penalty following the issue of an infringement notice by the ACCC. The notice related to Bera Foods' use of the word 'honey' and inclusion of a map of Australia on the label of one of its products. The ACCC considered that by doing this, Bera Foods had falsely represented that the product was Australian and was also made of honey produced by honey bees, when the product was produced in Turkey and was predominantly composed of plant sugars. Read the ACCC media release

ACCC report: Comparator websites – 28 Nov 2014

The ACCC has released a report into the comparator website industry in Australia, which examines how the industry operates, and identifies challenges and benefits for both consumers and businesses. The ACCC's concerns in relation to comparator websites centre on a lack of transparency in regards to the:

• extent of the comparison service, including market coverage;
• savings achieved by using the comparison service;
• impartiality and independence of the comparison service;
• undisclosed commercial relationships affecting recommendations to consumers; and
• content and quality assurance of product information.

The ACCC consulted with over 20 stakeholders including industry, other regulators and consumer groups, and utilised topical research. In 2015, the ACCC plans to release best practice guidelines to assist comparator website operators and businesses to comply with Australia’s competition and consumer protection laws, and also provide consumer guidance. Read the ACCC media release

False or misleading representations in telemarketing calls: ACCC takes action against EnergyAustralia and Bright Choice Australia – 21 Nov 2014

The ACCC has commenced proceedings against EnergyAustralia and its telemarketing company, Bright Choice Australia, alleging that Bright Choice signed up a number of consumers to plans over the telephone without the consumers' knowledge or consent. After the calls, EnergyAustralia sent the consumer a 'Welcome Pack' containing contractual documents and the consumer was treated as if they had agreed to switch energy services to a new plan. The ACCC alleges that the telemarketing and subsequent mail out of the welcome packs involved false, misleading and deceptive representations in contravention of the ACL, and seeks pecuniary penalties, declarations and costs. Read the ACCC media release

Secondary boycotts: ACCC takes action against the CFMEU – 20 Nov 2014

The ACCC has instituted proceedings against the Construction Forestry Mining and Energy Union (CFMEU) alleging it engaged, or attempted to engage, in secondary boycott conduct directed at Boral Resources (Vic) Pty Ltd. Boral is the exclusive concrete supplier to Grocon and the CFMEU has been in dispute with Grocon since 2012. The ACCC is seeking pecuniary penalties, declarations and injunctions. The matter is listed for a directions hearing on 12 December 2014. Read the ACCC media release

Mergers & acquisitions: ACCC clears Wesfarmers’ proposed acquisition of Pacific Brands’ The Workwear Group – 20 Nov 2014

The ACCC will not oppose Wesfarmers Limited’s acquisition of Pacific Brands Limited’s The Workwear Group (TWG). TWG is a wholesaler and retailer of industrial and corporate workwear, and includes the King Gee, Hard Yakka and Stubbies brands. Wesfarmers competes with Pacific Brands in the supply of industrial workwear through retailers such as Kmart and Bunnings. The acquisition involves Wesfarmers vertically integrating into the wholesale supply of workwear. Read the ACCC media release

Authorisation: ACCC allows university medical schools to continue streamlined admission policies – 19 Nov 2014

The ACCC has issued a final re-authorisation of the policies governing the selection of applicants to study medicine at graduate-entry medical schools. Read the ACCC media release

NBN: ACCC Chairman discusses NBN's future – 17 Nov 2014

ACCC Chairman Rod Sims spoke at an industry event hosted by Comms Day and Communications Alliance in Sydney, supporting the benefits of infrastructure-based competition and the view put by the independent NBN review panel (the 'Vertigan' review) that the disaggregation of NBN Co presents an opportunity to shape the future market structure. While acknowledging that the Government does not intend to follow that path, Mr Sims commented that NBN Co should put in place arrangements to provide for the future separation of NBN Co at an appropriate time. Mr Sims also discussed the current fixed services review and criticisms of the ACCC's historical regulatory decisions that have been said to have influenced the direction of NBN policy. Read the speech and the ACCC media release

Protecting Indigenous consumers: ACCC releases two short films – 14 Nov 2014

The ACCC has released two short films aimed at educating Indigenous consumers about their consumer rights, with a focus on direct debit contracts and scams, and revamped its Indigenous consumer hotline. Read the ACCC media release

Misleading or deceptive conduct and misrepresentations: ACCC urges egg industry to review free range claims – 13 Nov 2014

In a speech to the Australian Farm Institute Conference in Melbourne, ACCC Chairman Rod Sims said that the ACCC is encouraging egg suppliers to consider whether they should review the words and images used on their free-range egg cartons and any advertising claims about their free range eggs. Mr Sims noted that the ACCC does not see a need for a government standard that producers need to meet to be a free range producer. Read the speech and the ACCC media release

Unconscionable conduct in franchising: Federal Court makes orders against cleaning franchisor – 12 Nov 2014

The Federal Court has made a number of declarations against a cleaning franchisor (formerly Coverall Cleaning Concepts South East Melbourne Pty Ltd) (Coverall), the Victorian franchisor of a national franchise system that establishes and operates professional cleaning services. The court declared that Coverall had engaged in misleading conduct, made false or misleading representations and contravened the Franchising Code of Conduct and engaged in unconscionable conduct. Coverall’s former director was knowingly concerned in Coverall’s unconscionable conduct contraventions and was ordered to pay a penalty of $30,000 and compensate the two relevant franchisees for the franchise fees they had paid and the monies owing for work completed. The franchise agreements with the two franchisees were declared void from the date of the orders. A date for a penalty hearing is yet to be set. Read the ACCC media release

Unfair contract terms: ACCC takes action against car rental company – 10 Nov 2014

The ACCC has commenced proceedings in the Federal Court against CLA Trading Pty Ltd, trading as Europcar Australia (Europcar). Europcar is part of the global Europcar vehicle rental business. The ACCC alleges certain terms in Europcar’s standard vehicle rental contract are unfair and should be declared void. The ACCC also alleges that Europcar engaged in misleading or deceptive conduct and made false or misleading representations on its website regarding the maximum amount that a customer would be liable for if there was loss or damage to the rental vehicle or third party loss. The ACCC seeks declarations, injunctions, pecuniary penalties, orders for the publication of corrective notices and compliance program orders. This matter is listed for a directions hearing on 5 February 2015. Read the ACCC media release

ACCC report: September quarter 2014 – 5 Nov 2014

The ACCC has published its September 2014 quarterly report, ACCCount, highlighting the following activities for the quarter:

• launching proceedings in relation to:
  • price fixing – against a kitchen blender company;
  • price information sharing – against Informed Sources (an online pricing information provider) and several petrol retailers; and
  • posting fake online testimonials – against a carpet cleaning company;
• securing declarations that an egg producer engaged in misleading representations and penalties of $300,000 in relation to the labelling and promotion of ‘free range’ eggs;
• coordinating a national recall of electrical cables from an estimated 40,000 households and businesses with consumer agencies, building regulators and electrical safety regulators (read the ACCC media release);
• assessing or pre-assessing 67 matters relating to potential mergers and acquisitions, including the decision to not oppose the proposed acquisition of Goodman Fielder Ltd; and
• granting three authorisations, including for:
  • a network of Catholic hospital, aged and community care service providers to collectively negotiate with funding organisations; and
  • Rio Tinto Coal, Peabody Energy and Pacific National to coordinate operational arrangements relating to the transport of coal for export through the Dalrymple Bay Coal Terminal.

Read the ACCC media release

Product safety: Electrical cable and household cots – 30 & 31 Oct 2014

• A national recall of Infinity and Olsent-branded Infinity electrical cables was announced in August 2014 and additional recalls have now been announced aimed at smaller suppliers. It is estimated that around 40,000 households and businesses may have been affected. Read the ACCC media release
• Toys 'R' Us Australia Pty Ltd has paid a penalty of $10,200 after the ACCC found that the supply of ‘Nantucket 4-in-1’ household cots did not comply with mandatory safety standards. Read the ACCC media release

Cases

Misleading or deceptive conduct: Federal Court dismisses CocaCola's claims in relation to Pepsi's 'Carolina' bottle

Coca Cola Company v PepsiCo Inc (No 2) [2014] FCA 1287 (Justice Besanko, 28 November 2014)

Key issue

• The court will carefully consider the class of consumer and the context in which the representations are made to determine whether the conduct is misleading or deceptive.

Summary

CocaCola commenced proceedings against PepsiCo, claiming that:

• PepsiCo’s 'Carolina' bottle shape infringed CocaCola’s trade marks for its 'Contour' bottle; and
• PepsiCo had engaged in passing off and in misleading or deceptive conduct under the Trade Practices Act 1975 (Cth) by offering its beverages for sale in the 'Carolina' bottle.

Both bottles were made of glass and curved inwards beneath the label.

Justice Besanko dismissed the claims. In relation to the claim of misleading and deceptive conduct, Justice Besanko held that as both CocaCola and Pepsi were well-known and recognisable brands, the ordinary consumer would most likely make a purchasing decision on the basis of brand names or logos featured on the bottles, not merely the bottle shape. Justice Besanko was prepared to find that a sufficient number of consumers might self-select a drink from the refrigerator on the basis of its bottle shape, but considered that even in this situation, there was no likelihood of deception as the bottles had several distinctive features.

Source: AustLII

ACCC investigations: Full Federal Court upholds validity of compulsory examination notices issued to Moses and Paul Obeid

Obeid v ACCC [2014] FCAFC 155 (20 November 2014, Chief Justice Allsop, Justices Mansfield and Middleton)

Key issue

• 'Services' can include an EOI process run by a Minister where that process has a commercial character.

Summary

The ACCC issued Paul and Moses Obeid with compulsory examination notices under section 155 of the Competition and Consumer Act, requiring them to attend ACCC offices, give evidence and produce documents in private examinations. The Obeids sought declarations that the notices were not validly issued. In August, the Federal Court upheld the validity of the notices (read In touch). The Obeids appealed the decision, arguing that the 'services' specified in the notices were not 'in trade or commerce' as required by the definition of 'services' in the Competition and Consumer Act. The Obeids also challenged the validity of the notices in relation to the allegations of cartel conduct, on the basis that the relevant sections of the Competition and Consumer Act only applied where a bid is made after the 'contract, arrangement or understanding' has been entered into. The Obeids argued that the invitation to submit an EOI occurred before the alleged contract, arrangement or understanding alleged in the notices.

Judgment

The Full Federal Court dismissed the appeal and confirmed that the notices were valid, based on the commercial character of the competitive EOI process – in undertaking the EOI process, the Minister was involved in the providing of a right, benefit or privilege in a commercial setting, engaging on a commercial basis with those who were invited to provide EOIs. The court also dismissed the Obeids' argument in relation to the timing of the bid, finding that there is nothing in the legislation to restrict the operation of the relevant sections to situations where the bid is made after a contract, arrangement or understanding has been entered into. Read the ACCC media release

Source: AustLII

Misrepresentations: $85,000 penalty for misrepresentations about a hair product

ACCC v Dateline Imports Pty Ltd (No 2) [2014] FCA 1222 (Justice Rangiah, 18 November 2014)

Key issue

• The court may impose a higher penalty than would otherwise be the case where the party being penalised will only pay a percentage of that penalty by virtue of having an indemnity agreement in relation to the penalty.

Summary

This decision follows Justice Rangiah's decision in July 2014 which found that Dateline had falsely represented that its Keratin Complex straightening product contained at least 35 per cent natural keratin, when in fact it contained less than 7 per cent (read In touch). Justice Rangiah also found that Dateline did not have reasonable grounds for representing that a product ban in Ireland would be overturned, and that Dateline's Managing Director was knowingly concerned in that contravention.

Judgment

The Federal Court ordered Dateline to pay a penalty of $85,000, and made declarations in relation to the conduct. In determining the amount of the penalty, Justice Rangiah considered the following factors:

Nature of the contravening conduct: The court regarded Dateline's advertising campaign had been substantial but did not consider that the number of people capable of being misled by the contravening representations was as great as that suggested by the ACCC.

Amount of loss caused and profit gained: The court noted that the ACCC had not demonstrated that any customers of Keratin Complex had suffered loss as a result of being misled by the contravening advertisements, nor that Dateline had profited, or would profit in future, from the contravening advertisements.

Cooperation with the ACCC and failure to disclose indemnity agreement: Justice Rangiah noted Dateline's cooperation with the ACCC, and its voluntarily recall of the product and refunds to hairdressing salons and customers. Justice Rangiah also noted that Dateline had an indemnity agreement with its product supplier, under which Dateline would receive 80 per cent of any pecuniary penalty awarded against it. Justice Rangiah considered that the indemnity was a relevant factor to take into account in considering specific deterrence, which may result in a higher penalty being imposed than would otherwise be the case. However, as under the indemnity Dateline had released the supplier from any claims it might have against the supplier, which was a right of some value, Justice Rangiah did not consider that the indemnity warranted an increase in the penalty amount in this case. Read the ACCC media release

The ACCC is appealing the July 2014 decision to dismiss part of the ACCC’s case against Dateline (read In touch). The ACCC seeks to set aside certain orders made by the trial judge, as well as declarations, injunctions and penalties. Read the ACCC media release

Source: AustLII

Cartel conduct: ACCC fails in air cargo cartel action against Air New Zealand and P.T. Garuda

ACCC v Air New Zealand Limited [2014] FCA 1157 (31 October 2014, Justice Perram)

Key issues

• Establishing that conduct took place in a 'market in Australia' was essential to establishing a breach of the price fixing provisions of the former Trade Practices Act.
• The decision may have little practical impact given the 2012 decision in Norcast S.ár.L v Bradken Limited (No 2) [2013] FCA 235 where it was held that the cartel provisions introduced into the Competition and Consumer Act (then the Trade Practices Act) in 2009 can apply broadly even where no market in Australia is affected.

Summary

This case is one of the series of cases concerning a global investigation into an alleged international air cargo cartel. The ACCC commenced proceedings against 15 airlines, including Air New Zealand Limited and P.T. Garuda Indonesia Limited, alleging collusive behaviour with other international airlines in the fixing of fuel surcharges, and insurance and security surcharge, a customs fee and a freight rate on air cargo services between 2001 and 2006. The ACCC alleged that price fixing was facilitated by regular meetings of sub-committees and the use of published indexes, and had occurred in the markets in which cargo was flown into Australia from Hong Kong, Singapore and Indonesia. Air New Zealand and Garuda were the only airlines to defend the proceedings through to the trial in May 2013.

Judgment

Justice Perram dismissed the case. The ACCC's case was limited (in all but one minor case) to flights from airports outside Australia into airports inside Australia. The surcharges were imposed and collected at the originating airports of Hong Kong, Singapore and Indonesia. Justice Perram concluded that the competition did not occur in a market in Australia.

The one minor exception was a customs fee imposed by Garuda on flights from Australia into Indonesia, which Justice Perram held that the ACCC had not proved on the facts.

The airlines also raised a number of other defences, none of which were accepted by Justice Perram. Of note, these included an argument that the airlines' conduct was required by the laws of Hong Kong and Indonesia. Justice Perram held that neither the law nor the administrative practices of Hong Kong and Indonesia had required airlines to collude on fuel or insurance surcharges, even if the laws of those states may have permitted the alleged conduct in the sense that the conduct was not forbidden under the domestic law of those jurisdictions.

The airlines also argued that the ACCC should have been barred from seeking pecuniary penalties for a number of the allegations it raised because the Trade Practices Act contained a six-year limitation period that applied to pecuniary penalties. Justice Perram agreed that had the ACCC succeeded in its allegations, it would have been barred from seeking pecuniary penalties for those allegations. Read the ACCC media release

The ACCC is appealing this decision focusing on the court's finding that there was no market in Australia. Read the ACCC media release

Source: AustLII

False and misleading representations: Federal Court finds that Dulux painted a false picture in marketing products

ACCC v DuluxGroup (Australia) Pty Limited [2014] FCA 1158 (30 October 2014, Justice Siopis)

Key issue

The court will carefully consider the class of consumer at which the alleged representations are aimed in making a decision as to whether those representations are misleading or deceptive.

Summary

DuluxGroup (Australia) Pty Ltd marketed two of its paint products nationally in a wide variety of media. The representations in relation to one paint were made in a colour chart and a fact sheet, and in relation to the other paint, were made in documents, television advertisements, on web pages and through social media. The ACCC alleged that Dulux had made false, misleading or deceptive representations in relation to the ability of the paints to reduce the interior temperature, energy consumption and energy footprint of a house.

Judgment

Justice Siopis found that some of the representations alleged had been made out and others had not. Justice Siopis emphasised that the publications in which the some of the representations were made (including colour charts and fact sheets) were directed to a class of consumers contemplating a relatively large expenditure on paint to improve the long-term appearance of their home. A member of this class of consumers would most likely carry out research before purchasing the paint and read the colour card and fact sheet with care. Accordingly, Justice Siopis accepted Dulux's contention that the ordinary member of this class would understand the statements and words used in the publications to mean that applying the paint to the house could reduce the interior temperature of a house and reduce energy consumption with respect to cooling, with a reduction that may be significant.

Source: AustLII